Insulin-degrading enzyme (IDE, insulysin) is a primarily cytosolic peptidase shown to be important in the catabolism of insulin, the amyloid beta peptide, and likely other signaling and intracellular peptides. Its cellular physiology is therefore of considerable interest in the treatment of disorders such as diabetes and Alzheimer's disease. However the site of IDE action on these peptides, which are internalized into or otherwise present in the endosomal system, is yet to be fully understood. We propose to address the question of how this cytosolic enzyme encounters substrate peptides, like insulin, in the endosomal system, exploring a novel mechanism for IDE subcellular localization to this compartment. In particular, we propose that IDE is trafficked to endosomes by binding to membrane anionic lipids, particularly phosphoinositides, through a polyanion-binding site. In the first aim, we will test this hypothesis by using IDE polyanion site mutants, by altering levels of a key phosphoinositide, and by expressing a phosphoinositide binding competitor. We further propose to study, in the second aim, the participation of endosomal IDE in insulin and amyloid(beta(peptide(catabolism. We will manipulate endosomal IDE levels using mutant forms of the enzyme with reduced endosome localization, by decreasing PtdIns(3)P levels, and by increasing endosomal IDE by fusing it with a PtdIns(3)P- targeting domain. In the third aim, we will study the polyanion-dependent activation of IDE and its role in affecting its catabolism of cytosolic peptides. We will use IDE mutants to test the effect of activation on hydrolysis of peptide substrates identified using a ligand trapping technique and peptidomic analyses. We will also test for activation of cellular IDE by inositol phosphates and other potential endogenous activators. We will use our trapping technique to identify other endogenous effectors. These studies will develop a clearer picture of how IDE carries out its physiological functions and greatly benefit efforts to treat IDE related pathophysiological states.(